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Corporate responsibility reporting: NZ companies need to lift their game

Corporate responsibility reporting

When it comes to the quality of our corporate responsibility (CR) reporting, New Zealand businesses are lagging behind the rest of the world.
But NZX’s new Code of Corporate Governance that was launched in October 2017 – coupled with a growing demand from investors – is driving a change for the better.

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According to the just-released 2017 KPMG Survey of Corporate Responsibility Reporting, 69% of New Zealand companies publish information around their sustainability performance. This is lower than the global average of 72%.

In producing the survey, KPMG International studied the annual corporate reports and corporate sustainability reports produced by the top-earning 100 companies within 49 countries, including New Zealand.

Erica Miles, KPMG New Zealand’s Director of Sustainability Services, says it was encouraging to see New Zealand’s ranking had improved from 52% in 2015.

“We’ve definitely seen some improvement in the past two years. While this is primarily driven by investor pressure and increased consumer awareness, corporates themselves are also recognising that sustainability is a significant value-driver.”

There is another reason for New Zealand companies to lift their game. The New Zealand Stock Exchange (NZX) updated its Corporate Governance Code to require more specific reporting around non-financial performance. This took effect from October 1, 2017.

“The new Code is set to act as a catalyst for better business reporting, by raising the bar on what is expected. Ambiguous and fuzzy statements around a company’s ‘green’ activities will no longer suffice,” says Ms Miles.

“The world’s major capital markets have had this requirement for many years; so in that respect, New Zealand is playing catch-up.”

While the frequency of reporting in New Zealand has risen, the quality of the information provided still needs improving.

“Generally speaking, the quality of corporate responsibility reporting by New Zealand businesses is often lacking in balance, objectivity and transparency.”

Using an internationally-recognised framework for non-financial corporate reporting – coupled with third-party assurance of the data – is viewed as global best-practice.

Some of the key findings from the 2017 Survey:

When it comes to levels of CR reporting, New Zealand’s top 100 companies (by revenue) are currently performing below the global average. We’re sitting at 69%, compared to the global average of 72%.

Although a rising number of New Zealand companies are publishing information on their CR activities, the quality of that information is generally low. This is because few New Zealand companies use internationally-recognised reporting frameworks. This allows companies to make generic statements (e.g about their ‘green’ activities) that may be unsubstantiated or unqualified.

Only 35% of New Zealand companies align their CR report with the internationally-recognised Global Reporting Initiative (GRI) framework, or the Integrated Reporting (IR) framework.

When it comes to third-party assurance of their CR reporting, New Zealand also lags significantly behind the rest of the world.

You can download KPMG Global’s 2017 Survey of Corporate Responsibility Reporting report here. The New Zealand Supplement, which provides NZ-specific data and insights here and the presentation from our event on the 2nd of November 2017 here.

The release of this thought leadership has already attracted strong media interest, with KPMG now featuring in the NBR and on Radio NZ. You can download the media release here.

If you’d like to continue the conversation, please get in touch with a member of our New Zealand Sustainability team offering a full range of advisory services.

KPMG International Cooperative (“KPMG International”) is a Swiss entity. Member firms of the KPMG network of independent firms are affiliated with KPMG International. KPMG International provides no client services. No member firm has any authority to obligate or bind KPMG International or any other member firm vis-à-vis third parties, nor does KPMG International have any such authority to obligate or bind any member firm.